How big is the flexi cap category?
Flexicap is the largest category in the equity mutual fund space and the schemes manage a total of Rs 2.44 lakh crore of assets. There are 33 schemes in this category.
What are the advantages of investing in these funds?
The biggest advantage is the fund manager has complete freedom and there is no restriction on the fund manager to allocate to large-, mid- or small-cap companies. As compared to this, large-cap, mid-cap, small-cap and multi-cap schemes have restricted mandates and are constrained to stick to the companies that are defined by their portfolio. For example, a large cap fund will have to invest a minimum of 80% in companies ranked 1 to 100 by market-cap. However, a flexi cap fund manager can invest more in small- and mid caps and change this allocation dynamically based on the views of the fund manager. This helps investors who often are unable to decide whether to opt for large-cap, mid-cap, small-cap, multi-cap, or sectoral funds.
Who should invest in this category?
Long-term investors or first-time investors who do not want to take the trouble of individual stock selection and want a long-term allocation to Indian equity markets can opt for flexi cap funds. Financial planners also recommend this category to investors looking for just one fund in their portfolio, which gives them access to the best companies irrespective of market capitalisation with the aim to balance risk and volatility and help them accumulate wealth to meet their long-term goals. Investors looking to stagger their investments through systematic investment plans (SIPs) could also use this category of funds.
